Putin meets Belarus leader for talks on oil, gas

MOSCOW, Nov 10 (Reuters) Russian President Vladimir Putin today met Belarus's Alexander Lukashenko for what seemed likely to be tough talks on Russian oil deliveries and control of gas pipelines.

The two leaders, meeting in the glare of media cameras in an ornate room in the Kremlin, seemed anxious to mask any discord, greeting each other with a hearty handshake and warm words.

''Our relations are developing quite successfully,'' Putin said, adding he would like to discuss prospects for economic and political integration.

But in a statement before the meeting, the Kremlin said it was ''concerned'' by the fact that Russian oil deliveries to its western neighbour substantially exceeded its internal oil needs.

The Kremlin said it would like to discuss ways of ''correcting'' a situation where Belarus uses Russian oil, imported on favourable terms, for profitable oil products' exports to third countries.

''(This) practice ... leads to gigantic losses for the Russian budget,'' the statement said.

Russia satisfies most of Belarus's energy needs. Last year it transported 19 million tonnes of oil and 20 billion cubic metres of natural gas, with deliveries on the rise this year.

The talks on gas also seemed likely to be tough.

Last week Russia's ambassador in Minsk said Russia might raise gas prices for Belarus fourfold unless Moscow obtained some control of pipelines that carry gas to its European customers.

Lukashenko has threatened to sever all relations with Russia if it proceeds with the price increases.

Putin is one of a handful of world leaders to endorse Lukashenko's March re-election denounced in the West as blatantly rigged.

Belarus pays about per 1,000 cubic metres of Russian natural gas at the moment, while Russian state-run gas company Gazprom wants to raise prices to about 0, suggesting concessions on pipeline ownership would result in a price cut.

Belarus has repeatedly rejected such an offer.

A steep price increase would deal a severe blow to Belarus's economy, still run mainly on Soviet command lines and heavily dependent on cheap imported energy.

Reuters RL GC2317